3 Ways Manufacturing Companies Can Develop a Comprehensive Product Liability Protection Program
Written by
- Redaction Team
- Business Planning, Entrepreneurship
The product manufacturing and production market is ruthless when it comes to competition. Did you know that 30,000 new consumer goods are produced each year? Out of these, around 95% fail to hold public attention for long.
This means they soon go out of the market. Such misfortune is not reserved for new players but happens with even juggernauts like Coca-Cola and Google. Now, a lack of product demand is a bad enough issue.
However, brands face greater threats (especially those in the healthcare and IT space) in the form of product liability lawsuits. This litigation is often the result of defective design or negligent manufacturing practices that lead to consumer injuries.
Every company must manufacture products that meet the prescribed standards for public safety and health. Failing to do so can have them tangled in a legal battle. This means having a product liability protection program in place is a must. In this article, we will discuss three steps to managing product liability risk effectively.
The Aftermath of Negligence and Injuries
Not every product that reaches the market and causes consumer injuries is a result of intentional malpractice. This means the manufacturer may be charged on grounds of negligence (accidental).
In some cases (especially medical devices), it has been found that manufacturers fail to disclose the risks involved with their equipment. They may do so to have their stream of profits flowing or in fear of losing market credibility or product demand.
In any case, the aftermath is often undesirable. Some repercussions are serious enough to cause death, whereas others may harm human health (or the environment). When this happens on a large scale, a product liability lawsuit can be filed against the manufacturer.
This is often a long-drawn and frustrating process. Let’s understand with the help of an example – Fayetteville, Arkansas, is renowned for its rich manufacturing history and innovative spirit.
Some of the top industries across the city include retail, healthcare, and educational services. This means thousands of companies compete against each other to produce the next best product in the market.
Most of them do so to make their lives easier and help their clients. However, the Keith Law Group states that negligence can often cause legal problems. It is not a matter of whether the injuries were a result of intentional or accidental reasons.
Victims will file a lawsuit with the help of a Fayetteville personal injury lawyer. This can be a time-consuming process, and can easily drain a company’s finances. What’s most concerning is the fact that such claims can affect market credibility and customer trust.
3 Steps to Managing Product Liability Risk
In light of the legal and business outcomes, every manufacturing company needs to have a solid product liability protection program in place. Listed below are three steps to developing one
Transferring Risk through Supplier Management
It is always better to plan and prepare than be caught off-guard. Without an effective risk transfer program in place, any legal decisions will be made in court. If there is a legal agreement from the beginning (designed to assist with risk transfer), the relevant parties can be held accountable.
An example would be risk transfer agreements with suppliers and contractors. This will ensure that any errors on the respective party’s part will be added to their negligence account. Furthermore, statements of financial responsibility like insurance certificates will assist the company during any product-related claims.
Building Safety into Design
Perhaps the best way to minimize the chances of product liability lawsuits is to eliminate the risks and hazards during the design phase. When such a process is underway, companies must run safety reviews to check how a product will be used and the type of hazards it may lead to.
All products must meet their respective industry’s health and safety standards. Manufacturers must provide adequate warning labels and care instructions.
Periodic reviews should help maintain safety standards until final production. When the product is designed with utmost care, there are fewer chances of injuries or lawsuits due to manufacturing defects.
Maintaining Essential Records
Manufacturing companies also need to set up strong documentation policies for business objectives and regulatory requirements. This would include –
- Maintaining copies of all product orders and client design specifications (if any). Any changes that took place in the middle of this process must also be recorded.
- Written instructions and procedures must be developed to describe the quality control steps in detail.
- A document retention policy can help preserve the necessary documents.
The purpose of such policies is to stay prepared for any possible product liability claims in the future. When all things are available in black and white, it becomes easier to refer back to them as proof when the legal heat is high.
The 2023 Lex Machina product liability litigation report revealed that around 5,826 such cases (excluding multi-district litigation cases) were filed in 2022. The numbers may fluctuate a bit each year, but thousands of lawsuits are filed every year against product manufacturers.
Besides the points mentioned above, manufacturing companies must make room for customer feedback and reviews. High-profile negative publicity can be avoided when customers are allowed to provide blunt feedback. This can help the manufacturer take positive steps to eliminate risks and hazards associated with their products.
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